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Certificate ofBanking & Insurance
110.11.11
Banking Wealth Management
Prof. Dr. Hans BrunnerProfessor for Banking and Finance
School of Business Administration Fribourg
November 2011
$CBI $ $
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Wealth Management2 lessons @ 45 min.
Guest Speaker
Marc Lussyobjtec GmbHSenior ManagerSchoenenbergstr. 1008820 Waedenswil ZH
[email protected]@bluewin.ch
More than 20 years experience in Banking
Trader, Relationship / Portfolio Management and Project Manager
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Wealth Management2 lessons @ 45 min.
Overview
Roles and Products
Advisory Approach
From the Past to the Future
Index of Contents
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Wealth Management2 lessons @ 45 min.
Overview
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Wealth Management2 lessons @ 45 min.
Why do wealthy individuals need advice to manage their assets?
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Wealth Management2 lessons @ 45 min.
For the same reasons ill people need a doctor
Diagnosis
Expertise Experience
Hold clientshand
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Wealth Management2 lessons @ 45 min.
What is ment by Wealth Management?
Providing highly customized and sophisticated investment management and financial planning services to wealthy individuals.
Which client groups are covered....and which not?
High Networth Individuals Affluents
RetailInstitutionals
Very High Networth Individuals
Ultra High Networth Individuals
OX
OO
O
X
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Classification of Clients by Wealth
Ultra HNWI
$ 50 million
Affluent$ 100´000
Very HNWI$ 5 million
HNWI$ 1 million
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Wealth Management2 lessons @ 45 min.
Classification of Clients by Residence
Resident
Resident
Management of Assets Management
of Assets
Onshore Offshore
assets are managed in country in which owners of assets is resident
assets are managed in country in which owner of assets is not resident
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Wealth Management2 lessons @ 45 min.
Types of banks in Wealth Management
Global banks with private banking units
Traditional offshore focused private banks
Traditional onshore focused private banks
Retail or affluent focused local banks
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Wealth Management2 lessons @ 45 min.
Market shares global AuM (on- and offshore)
Total around 110 trillion USD
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Market shares AuM offshore
Total around 7 trillion USD
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Wealth Management2 lessons @ 45 min.
Importance of Wealth Management for a Global Bank
Core Results Credit Suisse by Division in Billions 2007 - 2010
-15
-10
-5
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5
10
Private BankingInvestment BankingAsset ManagementShared Services
2007 2008 2009 2010
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Wealth Management2 lessons @ 45 min.
Roles and Products
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Wealth Management2 lessons @ 45 min.
Roles in Wealth Management
Relationship Manager
(RM)
PortfolioManager
Analyst Trader
InvestmentConsultant
TaxSpecialist
FinancialPlaner
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Wealth Management2 lessons @ 45 min.
Role Relationship Manager (RM)
Relationship managers are the customer service giants that own the customers, know everything about them, manage that knowledge as an asset, and are able to meet the full complement of financial needs.“ [Ernst & Young ]
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Key Activities of an RM Client retention
- Make sure that existing clients stay with the bank
Client selection
- Identify profitable clients
Client Acquisition
- Increase client base
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Key skills and Know-how needed to be a successful RM
Profound product know-how
Social Skills
Sales Skills
Knowledge of compliance regulations
Know-how IT Tools
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Mandate types 1/3
Advisory Mandate
- Client makes investment decisions himself - RM provides specialists expertise and current market information - Client follows the markets on a regular base
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Mandate types 2/3
Trading / Investment Consulting Mandate
- Client makes investment decisions himself - Short term approach - Active Trading - Market sentiment is more important than fundamentals - Relationship Manger / Investment Consultant provides trading ideas on a daily base - Client follows the markets on a daily base
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Mandate types 3/3
Discretionary Mandate
- Relationship / Portfolio Manager makes investment decisions - Relationship Manager informs the client several times per year about development of the portfolio - Client does not need to follow the markets
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Advisory Approach
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Wealth Management2 lessons @ 45 min.
Advisory Process Analysis
Financial concept
Profile
Strategy
Implementation
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Analysis
Investments - Get an idea of size and asset types
Wealth creation - Inflows such as earnings on assets, salaries, expected inheritance etc.
Liabilities - Current and future financial obligations
Expenditures - Living costs, regularly payments, tax payments etc
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Financial concept Channeling and visualization of gathered information including clients
asset and liabilities, annual income and annual spending
The financial concept must reflect the clients overall situation
Allows the RM to provide his client a personalized investment solution
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Client profile 1/3 Adequate classification of the client in a client profile is a key success factor of a successful advisory process
Client profileRisk profile
Service profile
Risk abilityRisk tolerance
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Client profile 2/3 Risk abilityIt defines clients ability to cope with financial losses without a noticeable effect on their standard of living
Risk toleranceIt defines how a client deals emotionally with investment risks
1 2 3 4 5 6 7 8 90
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Spalte C
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Client profile 3/3 Service profileIn order to suit different client requirements it is very important to understand which services he needs and to define an according service profile
Possible service profiles are:
Advisory mandate Investment consulting Discretionary mandates
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Strategy Risk profile Investment strategy
Low
Moderate
High
Enhanced
Medium
Fixed-income
Income-oriented
Balanced
Capital-gains-oriented
Equities
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Implementation Implementation and maintenance of a strategy is an continuous process
Every strategy must be reviewed on a regular base
Risk control for every investment is a must
Implementation Control Adjustment
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From the Past to the Future
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Wealth Management – from the past to the future
1990 2020
Personal Relation Performance
Excellent Service
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Diagnosis
Expertise
Experience
Hold clientshand
1990 2020
Wealth Management – from the past to the future
Diagnosis
Expertise
Experience
Hold clientshand
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Wealth Management – the past Strong banking secrecy
Main goal of a lot of clients was tax optimization
Performance of limited importance
Clients had limited access to market information (→ Newspaper)
Clients were loyal to the their bank
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Wealth Management – the present . . .
Challenges Client Retention Increase of Sales Potential
Competition New competitors Trading Platforms/ Discount-Broker Consolidation
Client Well informed Decreasing loyalty Complex products
Bank Restructuring Compliance / Legal Higher Quality Standards
Technology Internet Mobile e-commerce
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CRM Tools in Wealth Management 1/3 Operational CRM market operation
Analytical CRM
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CRM Tools in Wealth Management 2/3
Portfolio
Issues- Get a new copy of passport due 25.5.11
- Needs to sign risk disclosure due 31.12.11
- Invite for golf turnament
Performance
Remarks05,1,11 Became father
10,2,11Would like to invest in commodities
15,3,11Plans to transfer more money
20.4.11Wife had car accident
Client dataName
Birthday
Riskprofile
Client since
Monthly reports
Hobbies
Name wife
Number of Children
Responsibel RM
Relations with other clients
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Wealth Management2 lessons @ 45 min.
CRM Tools in Wealth Management 3/3 Where can a CRM add value?
Measure activities
Analysis of current situation
Identification of target clients
Manage sales activity
Quick access to client information
Consulting
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. . . the future
?
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Wealth Management . . . the future Threats Weaker banking secrecy Regulations Decreasing margins Increasing costs Increasing quality standards
The way forward New markets (BRICS / Emerging Markets) Increased effort for client retention Increased tool support (CRM, product selection) BPO (Business Process Outsourcing) Mergers / take overs of smaller banks
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Wealth Management - Impressions2 lessons @ 45 min.